Health costs slowing down

Technology, prevention, new law drive savings

Dec. 26, 2013

Jerry Jones, with the translation assistance of Lupita Rodriguez, LPN, talks with patient Francisco Rodriguez of Anderson, Mo., during a visit to Access Family Care in Anderson, Mo., on Dec. 20, 2013. The clinic helps both the non-insured, like Rodriguez, and those who are under insured in the McDonald County area of Missouri. In 2014, expect a flurry of changes to continue to bend the health cost curve down, accelerated by the Affordable Care Act, experts say. / Roger Nomer / The Joplin Globe / Associated Press

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USA Today

WASHINGTON — In 2014, expect a flurry of changes to continue to bend the health cost curve down, accelerated by the Affordable Care Act, experts say.

Even die-hard believers in the connection between the economy and how people spend on medical expenses are saying this may be the year that proves them wrong, as providers and insurers rush to make changes to keep profit margins high in light of changes in how they’re billed. They’ll be led by improved technology that helps them see how to improve quality; preventive programs that have proven they can save millions in long-term costs; and an acknowledgment that consumers hold the purse strings.

“There is a considerable level of consensus based on several recent studies about how to keep costs down,” said David Blumenthal, president of The Commonwealth Fund, whose report looking at recent research was released Wednesday in the New England Journal of Medicine. “I think there’s a lot of work to be done.”

His research highlighted several areas that have seen progress — both before the health law was enacted and because of the law — but that still have further to go:

• Moving from a fee-for-service payment system toward risk-sharing or team-health pay systems, such as in accountable care organizations.

• Teaching consumers to choose care based on better quality and lower costs.

• Reducing administrative costs, such as by standardizing billing and claims forms.

Already, he said, costs have slowed, though it has been hard to determine how much of that has been because of the recession and how much was due to changes in how care is provided. But there does seem to be almost universal agreement that, with those four changes, costs will continue to slow — as they have in organizations that have already made those changes.

Some of those changes, he said, are “psychological,” because they send a message to providers that they must make changes or they will lose money in the future. The law supports accountable care organizations and rewards them for not duplicating tests or performing unnecessary procedures, and for preventing medication errors.

It includes penalties for hospitals for readmitting Medicare patients for preventable issues, such as infections or problems gained because no one followed up on their care after they were released. It provides grants for providers who participate in Medicare to build up their electronic record system.

It requires standardization of many forms. And it demands that insurers lay out their costs and benefits in an apples-to-apples way so that consumers understand what they’re paying for, and, more importantly, what costs they’re expected to cover themselves.

“I have always believed that our overall wealth is the predictor of what we spend,” Blumenthal said. “That pattern is no longer as clear as it was before.”

In fact, he thinks the nation’s providers need to be moving faster. There are only 500 accountable care organizations, and he said there should be more. Medicare foots about 30 percent to 40 percent of the total health care bill, so the federal government alone won’t force the change. And most insurance in the private sector “is still classic fee-for-service,” he said.

Throughout 2014, experts say, research will continue in the form of big data analysis, aided by provisions in the Affordable Care Act (ACA) that boost electronic health records. Within hospitals and provider groups, doctors will be able to see what works and what doesn’t; they’ll better be able to make sure quality care is delivered because they’ll receive electronic alerts when it is not; and they’ll be able to gain outside expertise quickly via electronic means.

“I think the Affordable Care Act certainly accelerated and facilitated those conversations,” said Rainu Kaushal, chairwoman of the Department of Healthcare Policy and Research at Weill Cornell Medical College. “We’re really fortunate in this country to have some really talented leaders of academic medical centers, and that there’s a lot of institutional thought going on there, as well as at other hospitals, about how to reduce costs through improved efficiencies.”

That doesn’t mean the research won’t bring some surprises: Rich Duszak, a researcher for the Harvey L. Neiman Health Policy Institute, released a study in the American Journal of Roentgenology showing that the costs of MRIs were going down, defying conventional wisdom that MRIs are a good place to cut costs, he said.

But that may be for two reasons: Policies reducing payments designed to cut costs may have, in fact, already worked. Or fewer providers are asking for them, either deeming them unnecessary or reducing duplications.

“Clearly there’s been a huge emphasis on bending the cost curve,” he said. “But in any policy discussions, we need to be looking at what things look like now compared to what they looked like five years ago, because this is a very dynamic process.”

Early intervention

In other areas, experts say there’s no doubt how savings can be achieved.

Ellen Nelson, who heads up ACA implementation at Catamaran, a pharmacy benefit manager serving 25 million people, said she expects costs to go down as more people gain access to insurance that covers medications.

“Right now in the United States, for the folks who do have benefits, there is an issue of adherence: taking medications in a routine way, and thereby treating and preventing an issue,” she said. “With the ACA, I think there’s really an emphasis on improving education.”

As an example, she said a 28-year-old man with early onset diabetes may never have had insurance before. “If we can intervene and start a health plan with that person at 28, we can avoid hospitalization and other chronic care costs as they get older,” she said.

Multiply that by hundreds of thousands of people, she said, and costs will come down, not only in health care, but in days lost at work.

Add to that more vaccinations and “we’ll have reduced outbreak of diseases,” she said. “With pharmacy benefits, even though the overall trend rate goes up for a period of time, it stabilizes by about 2020. You spend less per person, and there’s a better return on your investment.”